There is an unfinished basement which will likely be permitted to convert into an ADU but might trigger the installation of a fire sprinkler system ($30k).

All new supply is permitted, and easily traceable.

How much time will it take you to get permits and everything approved, then what if you come across work you didn't expect?

Currently, the back house is not permitted as a living area but I believe as a "Carriage house".

I understand each city/county may have their own permitting requirements, fees, regulations, etc. but I'm wondering how people are making any return on their investment if it maxes out at 90 day rental.

One year later, still no permits, and just raised the price of our home by 20%!

Would I rather own an AirBNB in Galveston for the next five years where a permit currently costs $250 a year and a correctly bought deal can still perform exceptionally, or in NYC where I can no longer operate now and for the foreseeable future?

Quote from @Li Kia: Yes, these are all legitimate deductions.You are technically only permitted to charge them a depreciated value.

I also look up the property on the county website to see if there were any permits pulled for the work recently done.

Do they have the land, permits, zoning, etc. locked up for the new builds?